Student Credit Card and Credit Education Blog

Regarding my previous mention of checking your credit score, there is also a way to check it for free. You can only do it once every 12 months, but it won’t cost you anything to do so. If you visit www.annualcreditreport.com, you’ll have the opportunity to request one and see how you fare within the three major credit reporting agencies - Experian, Equifax, and TransUnion.  And you should certainly do this, so that you can make sure everything is legitimate.  It’s one of the easiest ways to see if your identity has been stolen before they illegally sign up for sixteen credit cards in your name.

If you do a Google search for “free credit report”, you’ll almost certainly come across various sites that say they provide you with this service and may even say they’re closely affiliated with one of the aforementioned credit reporting agencies. Don’t bother with these. They may be fraudulent or provide misinformation. Only AnnualCreditReport.com will provide you with a legitimate free credit report. So, take advantage of this, particularly if you’re planning to utilize your credit score for an upcoming purchase and want to make sure there’s nothing fishy going on.

You know the feeling. Your buying a pair of pants at Gap and the checkout person asks, “Would you like to sign up for a Gap credit card? You’ll save 20%!” It sounds like a great deal - 20% off right then and there! Why not?

Well, there are a few reasons why you might want to think two or three times about signing up:

• Opening new cards = lower credit score - Fact: the more cards and available credit you’ve got, the lower your credit score will be. If you’re planning a car, TV, or home purchase in the next 6 months, your rates for financing might be a bit higher if your credit score is lower.
• Store card APRs are generally higher - If you aren’t one to always pay back your balances, then the interest you pay on these cards will most likely be more than what you pay from Visa and Mastercard. Double check the card’s APR if you plan on frequently charging.
• How often do you shop there? - Unless you plan on being a regular, the chance of forgetting to pay your balance or cancel the card may offset that introductory discount you receive.
• Is the discount worth it? - Keep in mind that this hefty discount will only be for the initial purchase. Afterwards, you may get occasional coupons based on your spending, but nothing like that first discount. If you plan on signing up, make the first purchase a fairly hefty one.

Unless I’m making a big purchase, I usually skip these. The time it takes to complete the application as well as the hassle of remembering to cancel the card after I pay off the balance usually makes the card a poor value for me. That said, 20% off a $300 purchase - particularly around the holidays - is a nice bonus!

I’ve heard several complaints about Chase credit cards over the past year but this one takes the cake.

First here is some background info. About a year ago, a friend applied for a Chase credit card with the goal of a low interest balance transfer. She got a great rate for 9 months and unfortunately didn’t get the balance paid off in time but the regular rate was only 11.9% which she could live with. She has not made a minimum or a late payment on any credit card in more than 7 years and her FICO score is around 720, which is quite good.

As we’ve recommended in the past, she regularly calls her credit cards and asks them if she qualifies for lower rates. She was doing this last Saturday and it was going really well. Out of four cards, three of them lowered her APRs by 1.5%-2.5%! Her last call was to Chase. They informed her that not only would they not lower her APR rate but they were going to increase it from 11.9% to 23% in 30 days!!

Apparently, they reviewed her credit report and determined there was something there they didn’t like and used that as a reason to almost DOUBLE her APR. Keep in mind that her credit is good, she never makes a late payment, regularly pays over the minimum and her other cards were more than happy to lower her APRs to keep her business.

Her only option to deal with the change, they explained, was to close the card (which she did and then transferred the balance to a lower interest offer on one of her other cards). Chase’s response to her inquiry is simply bad business and also poor treatment of a good customer. Why would a business make a decision to encourage a good customer to leave?

Given she holds three other cards that were happy to work with her to keep her business, I’d certainly recommend any of the three choose them over Chase any day. These include:

• Capital One No Hassle Miles Card
• Citi mtvU Credit Card for Students
• Discover Open Road Credit Card for Students

When you finance a TV or car, your credit score is a major factor in determining your interest rate. MyFICO.com realizes this and is currently offering 25% off their services, by using coupon code HOLIDAY25. Use it soon, though, as it expires on November 30.  So, if you’re interested in learning more about credit, repairing it, or just want to see how you’re doing, head over to MyFICO.

While we’re talking about coupon codes, be sure to seek them out for almost anything you buy online. Particularly with the upcoming holiday shopping season, where e-tailers will be most interested in luring you to their sites and pulling out your credit card. So, how do you find these sometimes strange combinations of numbers and letters? Google!

Simply do a search for “retailer coupon code”or something similar. You’ll probably get a large list, but look closely at them because sometimes they don’t offer anything additional you could otherwise get from going directly to the retailer’s site. For example, a coupon from Amazon offering free shipping after a $25 purchase - not very impressive since they offer that anyway!

Also, in preparation for November 23 (Black Friday), check out BFads.net to see scans of the pages and pages of discounts store retailers are offering. You could wait until the end of next week, but being in the know can help you plan better for the big day (and also better figure out your sleeping schedule if you want to be on time for the 5am doorbusters!)

I just got the most exciting email from the IRS - I was owed a tax refund! All I had to do was click on a link and enter some personal info. So, I followed their directions and was given an official (looking) IRS website, that would allow me to secure my refund. The only thing was that the URL was a series of numbers (or an IP address, for those technically sound) instead of “irs.gov”. Nice try, guys.

This tactic is called “phishing” and is defined as an email that appears to be legitimate and from a real company you may or may not have an account with. You’re then given a link that requires you to give them personal info and they wisk this data off to a database where they try and gleam as much financial information as they can from as many of your accounts as possible.

This is becoming more and more common, as there are a lot of people who think emails like this are legitimate. Here are some ways to avoid losing your bank account info:

• Check the URLs - If eBay is asking you for a new user name, make sure you’re giving it to “ebay.com” and not some random site you haven’t heard of. And, clicking the link in the fraudulent email isn’t going to effect anything - it’s when you enter in your personal information.
• Give them a call - You might get an email from your bank, saying your account has been compromised. Can’t tell if this is a real problem? Call their 800 number and double-check with their customer reps.
• If you get one, let someone know - Most companies have an email you can forward over phishing attempts. I know that eBay and Paypal have spoof@ebay.com and spoof@paypal.com, as I’ve received multiple scams pretending to be these companies.

So, don’t freak out over a message saying $3,000 was stolen from your bank account. Unless you’ve received a letter in the mail, or something more formal, give them a call to make sure. Or else you may found that your vacation money has actually been taken by an 18-year old hacker halfway across the country.

When traveling to Europe, the Orient,  or wherever your final destination may be, your options for paying for dinners and tourist gifts are either 1) traveler’s checks or 2) your credit card.  The choice of which to used to be quite easy, but things have changed.

The ideal choice used to be to swipe your plastic. The big three (Visa/Mastercard/AMEX) would give you an excellent exchange rate, since they run so much money through the international banks. However, these days, cards have begun to affix surcharges when they’re used internationally. The percentages are usually fairly low (from 1%-3%) but they can add up.

These fees make it so it might be worth looking into traveler’s checks, particularly if A) you can get them for free and B) you find a place with good exchange rates. You do lose some convenience, but expensive meals can rack up some big bills. So, take a close look at your options, and choose which payment method makes the most sense to you (and your wallet.)

How do you compare credit card offers? Do you look at the APR? The necessary credit score? A strong rewards program? Annual fee? Something else? Well, here is a short list of factors that should take into consideration when shopping different student credit card offers.

1.  Type of card – There are three main types of credit cards you can get:

• Secured cards are for those with poor credit and require a security deposit.
• Regular cards don’t have many features but have higher credit limits than secured cards but lower limits than premium cards.
• Premium cards come in the various metallic flavors (silver, gold, platinum) and have the highest credit limits. They can also have rewards programs like cash back or travel insurance.

2.  Grace period references the number of days you have to pay your bill in full without a finance charge. This isn’t standard and does vary by card.

3.  Calculation of the finance charge is important as I discussed before with regards to the two-cycle average balance. Take a look at how the different cards work their interest accruals.

4.  Fees are not only in terms of annual fees but also over-the-limit fees, late payment fees, and balance transfer fees.  

5.  Cash advance features which refers to how much it costs to use, how it’s accessed (ATM or checks) – as well as any associated fees and how payments are credited.

6.  Credit limit is determined by your credit history, but some cards come with a predetermined limit.

So, next time you’re in the market for s new card, keep this list in mind and be sure to check it twice.

Students: worried about getting in over your head with credit card debt?
Parents: worried your kids might be getting in over their head with credit card debt?

Well, back in August,  Senator Herb Kohl of Wisconsin was also not thrilled with the high balances that undergraduates (and even more for graduate) students are burdened with. Student loan debt is enough to worry about - more than that is quite unnecessary!

Therefore, he decided to introduce the “Student Credit Card Protection Act”. This legislation seeks to make it more difficult for students to acquire more credit than they should be able to afford. Specifically, the rules include the following:

• Require credit card companies to verify a student’s annual income if he/she is under 21.
• Require a parent, legal guardian or spouse to co-sign if the student has no verifiable income. Also, requires approval by the co-signer for increases in credit.
• Limit the amount of student’s credit based on their annual income.
• Prohibit the credit card company from issuing multiple cards to students.

Most of these seem like fairly obvious restrictions and it’s quite surprising that Congress has to get involved to make these stipulations into law.  It’s still at the initial stages, so hopefully,  it’ll progress further down the path and meet with universal approval. Even better would be if some of these legalities were in place for all consumers, and not just for students!